Developers optimistic about future of data warehouses
Data warehouses, the most promising aspect of the technology boom for the industrial real-estate sector, have failed to make their predicted impact on Warsaw. This has only heightened the readiness of developers, confident of the city's long-term prospects.
"Data warehouses take over the data-management process of companies by putting data on a single large server," said Brian Burrough, managing director of U.S. TKG International, a partner in CEIDCO, which operates the Warsaw Distribution Center and Ozarow Business Center. John Palmer, director of CB Richard Ellis, has watched the data-warehouse phenomenon spread across the world. "The whole thing came from America," Palmer said. "Their first landing was in Britain, and from there they've spread throughout Europe." But their impact has failed to meet expectations. "In Europe they've taken less space than originally anticipated," he said.
According to Burrough, these facilities began to appear in Poland about a year ago during the telecommunications boom. "That was when the dotcom craze was going on," Burrough said. "Now that that's crashed the demand for those type of services has gone down."
Data warehouses were an exciting prospect for warehousing developers because of their demands for large areas of quality storage space. "Telecom companies take warehouse buildings (with a ceiling height) of eight or nine meters and they put in a second floor so they have two levels of either telecom switches or big computer servers," Burrough said. "It's much cheaper to put these in an out-of-town warehouse than in a downtown office building."
In Europe, data warehouses have substantial requirements for warehouse space. Hans van Luijken, first vice president of Prologis, a developer of logistics parks in Warsaw, Blonie, Teresin and Poznan, said his company provides a 70,000-square-meter facility for Amazon in Bedfordshire, U.K. "They have a divided floor, so the facility holds their goods, but also their hardware."
Unfortunately for the warehouse industry, the steam ran out of the dotcom boom before it fully reached Poland. "Last year people thought a lot of those would be done and they haven't actually come (about)," Burrough said. "There was a big wave of people coming in to look but only one or two of them landed."
"The hiccup has been basically the fall in the Nasdaq, and this has rippled down to Poland," Palmer said. "There are companies here waiting to set up but are waiting to get financing."
Two warehouse locations in Warsaw benefited substantially from the recent telecommunications boom. According to Palmer these are the only facilities that meet the demands of foreign data companies. AIG/Lincoln's Diamond Business Park in Piaseczno provides 10,000 square meters of space for a data storage facility operated by the NGKT consortium, while Apollo-Rida's Zeran Distribution Center is host to a 5,000-square-meter Era GSM switch.
The main demands of data warehouse operators are a good power supply and good telecommunications infrastructure, which are more readily available outside Warsaw. "Those sort of companies are not interested in going that far out," van Luijken said. "Facilities closer to the center run into potential difficulties with power supply." This is difficult to reconcile with the operators' manpower needs. "The personnel that they require also means that they have to be close to the city center, around the pool of employment," van Luijken said. For Palmer, Telekomunikacja Polska's (TPSA) monopoly on fiber-optic communications means that major operators prefer to wait for free access to high-bandwidth networks.
The positive outcome of the short-lived excitement caused by data warehousing is that warehouse operators are now fully prepared for these prospective clients. CEIDCO is offering to prepare warehouses for this function, including formal arrangements and installation of the additional telecommunications and power infrastructure for large contracts. "It would have to be a company with a proven track record and a good financial statement to back them up," Burrough said.
This readiness reflects the common opinion among warehouse developers that the dotcommers will soon make a comeback. "I still think data warehouses are something that is still going to happen," Burrough said.
Anticipating the return of the IT sector, developers see Warsaw as a market with good long-term prospects. Burrough said that the current cooling off of global markets has made international companies consider moving their European manufacturing facilities to Poland, a strategy that will create demand for warehousing and logistical facilities. "If they're producing for a larger region, obviously there's going to be a lot more product," Burrough said. "Not only are they going to be distributing around Poland but they'll also be sending it out all over Western Europe."
According to van Luijken, the long-term prospect for Poland's warehouse industry as Europe's logistical hub lies in its proximity to Russia, Ukraine and Belarus, and depends on the growth of those markets, leaving the industry to develop within Poland. "You will only have that hub function when those countries mature, from an economic point of view," he said. "The hub function we're all dreaming about is not short term. The internal market is of primary importance."
